Exempt Employees

Supreme Court to Decide Overtime Fate for Pharmaceutical "Sales Representatives"

 On April 16, the U.S. Supreme Court will hear arguments in an important case under the Fair Labor Standards Act, Christopher v. SmithKline Beecham Corp.  The specific question in the case is whether pharmaceutical sales representatives are eligible to receive overtime pay.  The larger issue is the deference that is owed to the U.S. Department of Labor's interpretation of that statute.  The Fair Labor Standards Act and Department of Labor regulations require, in general, that employers pay 1.5 times an employee's regular hourly rate of pay for each hour worked in excess of 40 hours per week, unless the employee qualifies for an "exemption" from the overtime rules.  One of those exemptions covers "outside salespersons," employees whose primary job duty is to sell products away from their employers' offices. The Christopher case involves the overtime claims of pharmaceutical representatives who are employed by drug manufacturing giant GlaxoSmithKline, but who never received overtime pay despite working significantly more than 40 hours per week. The Glaxo reps visit doctors' offices on "detail calls," and promote Glaxo's products in the hope that doctors will prescribe and that patients will buy those products.  The sticking point is that the reps don't sell any pharmaceuticals to the physicians they visit. In fact, they are barred by federal law from doing so.  So, while at a superficial glance, their work consists of some of the same activities as traditional salespeople, federal regulations actually prohibit them from selling their employer's drugs to doctors or anyone else.  The Department of Labor has weighed in, strongly supporting the reps' position.